Service center operator and energy products distributor
Russel Metals Inc.s earnings fell in the third quarter
due in part to lower pricing levels.
Ontario-based company posted net income of Canadian $18.9
million ($18.1 million) for the three months ended Sept. 30,
down 15.6 percent from C$22.4 million in the same period last
year on revenue that decreased 11.8 percent to C$796.8 million
($764.1 million) from C$712.6 million.
Russel said it sees
the steel market as stable but expects economic uncertainty to
prevail in 2014.
The company acquired
two energy sector companies this year for C$11 million ($10.5
million) and established two new stores in Texas.
Russel will likely
close another acquisition and erect additional stores in Canada
before year-end, president and chief executive officer Brian R.
Hedges and executive vice president and chief financial officer
Marion E. Britton said during a Nov. 8 earnings call.
acquisition consists of one large location in Alberta with
roughly Canadian $50 million in annual revenue, the executives
growth, "We are doing greenfields in the U.S. because it was
too expensive to buy (existing oilfield-supply stores)," Hedges
"We have seen economic
uncertainty going on for a year now," Britton said. "Our
current (steel) pricing is stable. In the energy business,
drilling activity was lower in the third quarter than a year
ago, but we expect (demand) improvements in the fourth and
first quarters. Announcements (by some energy producers)
indicate more activity will go on."
Britton said customers
dont want to speculate on steel pipe prices and would
rather "take more certainty in price," so import purchases have
declined. "When we think there will be issues (with foreign
supply), well stay away from countries that are dumping,"
"We think a trade case
will be initiated in Canada" by oil country tubular goods
(OCTG) producers, mirroring the anti-dumping complaint lodged
in the United States this summer, Hedges said. "Until then, we
do not expect large price increases."
OCTG pricing is
stable, he said, "but with seamless and ERW
(electric-resistance welded pipe) capacity coming on, there
will be additional (downward pricing) pressure there."
In the flat-rolled market, prices are moving up, following
scrap, executive vice president and chief operating officer
John G. Reid said on the call. "Short term, there is not much